ORDER (DICTATED IN OPEN COURT) Per Shri George Cheriyan (Senior Vice-President) - This appeal by the assessee relates to the assessment year 1984-85. The appeal raises a very interesting issue. Fortunately for us there are certain facts which are not in dispute. The assessee constructed a house property. He had taken certain loans for that property. In the accounting year, some of those loans were repaid. Such repayments were made by taking other loans. For the latter loans taken for repaying the original loan, the rate of interest was higher. The genuineness of the loans taken for repaying the original loans is not in dispute. The fact that the latter loans were taken for repaying the original loans was also not in dispute. The interest paid this year was Rs. 50,826. The ITO found that in the earlier year interest paid was Rs. 35,948. According to the ITO, the loans this year were taken at a higher rate of interest and were also taken subsequent to the construction of the property and, therefore, the claim for education of interest should be restricted to Rs. 35,948. He accordingly allowed as a deduction only Rs. 35,948. 2. The assessee appealed but without success to the AAC who disposed of the matter on merits consequent to non-appearance of the assessee. 3. Before us, the learned counsel for the assessee submits that on the facts as set out by us, the borrowings were only for construction of the property and, therefore, interest paid on the same should be allowed as a deduction in full. 4. The learned Departmental Representative placed emphasis on the wordings of the provisions of section 24(1) (vi) which read as under :- "(vi) where the property has been acquired, constructed repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital." He submitted that the deductions are admissible where property has been acquired with borrowed capital. Therefore, according to the learned Departmental Representative, to put it figuratively, a line should be drawn on the date of the acquisition of property and on amounts borrowed till that date the interest which is paid would be an admissible deduction. He submitted that the provision does admit of an interpretation that if the amounts originally borrowed were repaid interest should be allowed as a deduction on the fresh amounts borrowed to repay the original amounts. 5. He submitted that the provision does admit of an interpretation that if the amounts originally borrowed were repaid interest should be allowed as a deduction on the fresh amounts borrowed to repay the original amounts. 5. The question that arises for consideration is whether the interpretation placed by the Revenue is acceptable or not. 6. This provision has been introduced to give a fillip to house construction. Where loans are genuinely taken, cases can well be envisaged where a person may tell the borrower that he is able to advance the loan only, say, for a period of six months or so. To illustrate further, Mr.X may be having cash available with him which he can spare for six months to Mr.Y who is constructing a house. X may require the money back afterwards to send his son for education. If Y borrows money for six months and in the meanwhile finishes the construction of the house, and in order to honour his commitment to X he borrows from somebody else and repays X according to the stand of the Revenue, the interest on the borrowed by Y to honour his commitment to X cannot be considered as an admissible deduction. We are unable to subscribe to such a strict interpretation. In our view, what is to be seen is whether the transaction is colourable. As long as the transaction is not colourable and is entered in good faith and the loans are genuine and the loans subsequently taken are to discharge a loan originally taken in the normal course, the deduction under the provisions sec. 24(1) (vi) cannot be restricted. In the present case, there is no material to suggest that the transaction was colourable or there were any of the other deficiencies to which we have referred. On the other hand, the entire material shows that the transactions have been accepted to be genuine. In such circumstances, we hold that the assessee is entitled to the full relief claimed under section 24(1) (vi) of Rs. 50,826. The appeal is allowed.